Starmer refuses to rule out further tax rises amid winter fuel U-turn and £300bn spending pledge
11 June 2025, 14:01 | Updated: 11 June 2025, 14:29
Sir Keir Starmer failed to rule out more tax rises to fund the winter fuel allowance U-turn, as critics claim hikes are "inevitable" following the Government's Spending Review.
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The Prime Minister was speaking at Prime Minister's Questions on Wednesday, before Chancellor Rachel Reeves announced plans to splash the cash on the NHS and Net Zero.
The government's political rivals were keen to know how it planned to fund the extra £300billion it intends to allocate to these departments over the next five years.
The PM avoided ruling out further tax rises in the Commons, despite last year's Budget imposing the biggest increase for a single fiscal event on record.
Ms Reeves added fuel to the fire by telling MPs that day-to-day spending must be covered by 'tax receipts'.
At the last Budget, Ms Reeves loosened the government's borrowing rules to allow for a generous fiscal envelope.
However, the approach was immediately put under pressure by the slowing economy and Donald Trump's trade war.
Read more: Reeves vows to end the use of hotels to house asylum seekers by next election
Labour also faces pressure to increase funding for defence, while contending with potential further revolts over benefits cuts, following the humiliating U-turn on winter fuel allowance.
The full scale of the funding gap for the current spending plans won't be clear until the next fiscal package is released.
Shadow chancellor Mel Stride labelled the review a "spend now, tax later" plan and claimed Labour did not know where the money is coming from.
But Ministers described the spending plans as the end of 'the end of austerity'.
Speaking in the chamber, Ms Reeves said: "In this spending review, total departmental budgets will grow by 2.3%-a-year in real terms. Compare that to the Conservative choice for austerity. In contrast to our increase of 2.3 per cent, they cut spending by 2.9 per cent per year in 2010.
"So let's be clear, austerity was a destructive choice for the fabric of our society. And it was a destructive choice for our economy too, choking off investment and demand, creating a lost decade for growth, wages and living standards."
She added: "My choices are different. My choices are Labour choices. The choices in this spending review that are possible only because of my commitment to economic stability and the decisions that this Government has made.
"The Conservatives' fiscal rules guaranteed neither stability, nor investment. And that is why I changed them. My fiscal rules are non-negotiable and they are the foundation of stability and of investment."
